Despite the global trend of increasing prices of petroleum products, the federal government has decided to reduce the price of petrol by Rs 7.06 per litre for the month of June in line with the dip in global crude oil prices due to virus-fuelled lockdowns.
Following the notification issued by the Finance Ministry on Sunday, the price of petrol has come down from Rs 81.58 to Rs 74.52 per litre. The fuel is mainly used in cars and motorcycles. However, the government regulator has slightly increased the price of high-speed diesel (HSD) from Rs 80.10 to Rs 80.15 per litre, which is mainly used in transport and agriculture sectors. The meagre increase in the HSD price may have no impact on the inflation rate, which will directly benefit the public. With the start of crop harvesting season, the demand for diesel has increased, prompting the government to lift the ban on imports.
The price of kerosene oil has been slashed from Rs 47.44 to Rs 35.56 per litre. Kerosene is used for cooking, especially in far-flung areas where liquefied petroleum gas (LPG) or pipeline gas is not available. The new prices will come into effect from today.
Prime Minister Imran Khan said Pakistan now had the cheapest fuel cost comparing other states in South Asia, after the government announced reduction in oil prices.
We have further reduced petrol, light diesel oil, kerosene oil prices. Now we have the cheapest fuel cost compared to other states in South Asia, the prime minister said in a tweet. He said India was almost exactly the double, while Bangladesh, Sri Lanka and Nepal were all 50 to 75 percent more expensive than Pakistan.
It may be mentioned here that the Oil and Gas Regulatory Authority (OGRA) had recommended to the government to reduce petrol price by Rs 7.06/litre, Kerosene Rs 11.88/litre and light diesel oil (LDO) price by Rs 9.37 per litre for June 2020. The regulatory body had suggested that the price of diesel should remain unchanged.
The government is also charging 17 percent general sales tax (GST) on all petroleum products. Apart from it, the government is also collecting petroleum levy (PL) on these products, which is directly taken from consumers.
For May 2020, the government, in order to meet the revenue shortfall, had increased the petroleum levy (PL) on these products. The PL on diesel was increased by Rs 4.95 to Rs 30 per litre. The levy on petrol was increased by Rs 4.01 to Rs 23.76 per litre. PL on kerosene was also increased by Rs 5.69 to Rs 18.02 per litre and on LDO by Rs 6.24 to Rs 11.18 per litre.
The federal government on Saturday decided to pass on the benefit of reduction in oil prices to consumers from Monday, while turning down a proposal to give advantage of the reduced prices to oil refineries.
Headed by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, the Economic Coordination Committee (ECC) of the cabinet also approved a mechanism to retire Rs 200 billion circular debt without making any significant changes in the original proposal that the Power Division moved a day earlier but was not liked by the ECC.
The ECC discussed in detail and approved the criteria for disbursement of Rs 200 billion in power sector received through Islamic Sukuk, according to a Ministry of Finance hand-out.
According to the decision, the energy purchase price inclusive of GST will be paid to ensure maximum generation is available during June, July and August as per the generation plan for the next three months.
The statement was silent on the issue of Petroleum Division’s proposal to put on hold, until June 15, the proposed downward revision in oil prices for the next fortnight.
The proposal was aimed at allowing the industry to recoup some of its losses by selling at existing rates.
The Energy Ministry had warned the ECC that a reduction in petroleum prices would create a major supply disruption, which may take weeks and months to normalise as stocks with most of the OMCs were abnormally low.
According to reports, the ECC did not accept the proposal and decided that the benefit of reduction in prices should be passed on to the consumers. Agencies
